"Who is who" in these FALQs
The person making the appointment under a Power of Attorney document is referred to as the "principal".
Similarly, the person being appointed is referred to as the "attorney".
For the purposes of these frequently asked legal questions, we use the word:
- "principal" to refer to the person making the appointment; and
- "attorney" for the person being appointed.
What things are attorneys not permitted to do during their appointment period?
There are a number of things that an attorney in Australia is not permitted to do during their appointment period — for example,
they:
-
may not perform any non-delegable duties of the principal (such as the role of company director — see Question below);
- may not make a Will for the principal;
- may not swear an affidavit in the name of the principal; and
- may not pass on their powers or duties to another person.
Can a director of a company appoint an attorney under a Power of Attorney to act in that role on their behalf?
No, a director anywhere in Australia is not able to appoint an attorney to act on their behalf as a company director.
However, this question is often confused with a company's ability to appoint an attorney to act on behalf of a company, which is allowed
and provided for under many company constitutions.
Can an attorney make or renew a binding death benefit nomination under an SMSF?
Possibly. The law around this issue is unclear throughout Australia.
The Superannuation Complaints Tribunal has held that it is possible for an attorney to make a binding death benefit nomination on behalf of a
principal.
Although there are no laws expressly prohibiting the attorney from making such a nomination, many legal practitioners advise against doing so
because of the associated risks. If an attorney makes a binding death benefit nomination in favour of a certain person or persons on behalf of
the principal, then the attorney may find themselves subject to a claim by a family member or other person interested in the principal's
affairs who may disagree with the nomination.
Because of these risks, many practitioners are of the view that it is a decision which — as with the execution of a Will and the role of
a company director — is so personal in nature that it should only be executed by the donor themselves.
It is important to note that a member is required to renew a binding death benefit nomination every three years.
If the principal does wish to give the attorney the power to sign a binding death benefit nomination, despite the risks set out above, a
principal could specify that they give their attorney the power to sign their death benefit nomination every three years on their behalf,
provided that the nomination reflects their existing nomination or states who is to be nominated and this power is written into the Enduring
Power of Attorney document.
What happens if an attorney dies or lacks decision making capacity during their period of appointment?
In Victoria, if an attorney dies or lacks decision making capacity during their period of appointment, then their appointment is automatically
revoked and will no longer have effect.
If that happens and an alternative attorney:
- has been appointed under the Power of Attorney document, then the alternative attorney will act in place of the appointed attorney who they
are nominated to be an alternative for; or
- has not been appointed under the Power of Attorney document, then the role of attorney is vacated and the principal is left without
an attorney. Maddocks recommends that principals appoint alternative attorneys to guard against this occurrence.
What is the maximum number of attorneys a principal can appoint at one time using Cleardocs?
You can use Cleardocs to arrange for a principal in Victoria to appoint:
- under an Enduring Power of Attorney:
-
for financial matters, up to 3 attorneys acting jointly and severally and one alternative attorney;
-
for personal matters, up to 3 attorneys acting jointly and severally and 1 alternative attorney;
-
for attorneys acting for both financial and personal matters, up to 3 attorneys acting jointly and severally and 1 alternative attorney;
and
-
when appointing separate attorneys for financial and personal matters, 1 attorney and 1 alternative attorney for each type of
appointment.
Does revoking one attorney's power also revoke the power of any remaining joint attorneys?
Unless otherwise specified within the Enduring Power of Attorney document, the ending of any power of a joint and several attorney (where
there is more than one appointment) does not affect the ability of any remaining joint and several attorney(s) to exercise their power.
If my spouse is my attorney and we get divorced, then does the Power of Attorney arrangement automatically end?
No, if a principal in Victoria has their spouse as their attorney and they get divorced, then the Power of Attorney remains in place.
Therefore, when people get separated or divorced, Maddocks recommends that they review and update their Powers of Attorney and estate planning
arrangements.
When are attorney appointments automatically revoked?
Unless an alternative attorney has been appointed, all Power of Attorney documents in Victoria are revoked:
- if the attorney becomes bankrupt;
- if the attorney becomes insolvent under administration;
- if the attorney dies or lacks decision making capacity;
- if the attorney becomes a care worker, a health provider or an accommodation provider for the principal of an Enduring Power of Attorney;
-
if an attorney for financial matters is convicted or found guilty of an offence involving dishonesty; or
-
if the principal dies.
Also, in Victoria:
- Enduring Powers of Attorney are automatically revoked if the principal executes a later one;
- Enduring Powers of Attorney are revoked if the principal executes a Revocation Document or a Revocation of Appointment Document.
What are the requirements for witnessing the signing of an Enduring Power of Attorney (financial matters, or personal matters or
both)?
With the introduction of the Powers of Attorney Act 2014 (Vic), the requirements for witnessing the signing of an Enduring Power of
Attorney (financial matters, or personal matters or both) has become more stringent.
The signing must be witnessed by 2 adult witnesses, one of which must be authorised to witness affidavits or be a medical practitioner.
In addition, both witnesses must not be:
-
an attorney or alternative attorney under the power of attorney;
-
a relative of the:
-
principal;
-
attorney appointed; or
-
alternative attorney appointed; and
-
a care worker or accommodation provider for the principal.
A relative includes any of the following:
- spouse or domestic partner;
- child;
- parent or step-parent;
- sibling or step-sibling;
- grandparent;
- grandchild;
- uncle or aunt; and
- nephew or niece.
A care worker is a person who performs services for the principal and receives remuneration for doing so. A care worker does not include a
health provider or a person who receives a carer payment or other benefit from the Commonwealth for providing home care for the principal, such
as Centrelink payments.
An accommodation provider means a person who, in a professional or administrative capacity, provides accommodation for the principal.
What are 'financial matters' under an Enduring Power of Attorney?
An attorney or alternative attorney under an Enduring Power of Attorney for financial matters, may act on behalf of
the principal for any
matters relating to the principal's financial or property affairs.
This includes any legal matters that relate to the principal's financial or property affairs but is subject to any
limitations that may
be set out within the Enduring Power of Attorney document.
Examples of financial matters include:
- paying rates, taxes or insurance premiums of the principal;
- carrying on any trade or business of the principal;
- dealing with land for the principal;
- making money available to the principal, such as withdrawing and depositing funds from a bank account; and
- paying any debts of the principal.
What are 'personal matters' under an Enduring Power of Attorney?
An attorney or alternative attorney under an Enduring Power of Attorney for personal matters will be able to act on
behalf of the principal for
matters relating to the principal's personal or lifestyle affairs.
This includes any legal matters that relate to the principal's personal or lifestyle affairs but is subject to any
limitations that may
be set out within the Enduring Power of Attorney document.
Examples of personal matters include:
- whether the principal can work;
- where the principal is to live and with whom;
- daily living issues such as diet and dress;
- who the principal is to associate with; and
- health care matters.
What is an 'offence involving dishonesty' in relation to financial matters under an Enduring Power of Attorney?
There is a requirement that an attorney or alternative attorney disclose to the principal whether they have been convicted of an offence
involving dishonesty. This only relates to an enduring power of attorney for financial matters.
An offence involving dishonesty is regarded as:
- any offence that involves dishonesty; and
- which is punishable by at least 3 months's imprisonment; and
- whether it is an offence in:
- this State; or
- the Commonwealth; or
- another State or Territory of the Commonwealth; or
- a foreign State; or
- a foreign Territory.
If a nominated attorney or supportive attorney for financial matters has a conviction or finding of guilt as set out above, the Cleardocs
system will not enable that attorney or alternative attorney to be appointed.
Maddocks recommends that you seek independent legal advice if you wish to appoint an attorney or alternative attorney who has been convicted of
such an offence as additional requirements must be satisfied in order to make their appointment legally valid.
What is a 'conflict transaction' in relation to financial matters under an Enduring Power of Attorney?
A conflict transaction is a transaction in which there is or may be a conflict between the:
-
duty of the attorney to the principal; and
-
the interests of the attorney, or a relative, business associate or close friend of the attorney.
This only relates to an Enduring Power of Attorney for financial matters.
What is 'decision making capacity' for the purposes of Enduring Power of Attorney documents?
A principal must have decision making capacity in order to create a legally effective Enduring Power of Attorney (financial or personal or
both) document.
Similarly, an attorney and alternative attorney must have decision making capacity when they accept their roles and throughout the period that
they are acting as an attorney or alternative attorney.
Some of the factors to consider in determining whether a person has decision making capacity includes an ability to:
- understand the information relevant to making a decision;
- understand the effects of making such a decision;
- retain such information to the extent necessary to make a decision;
- use or weigh that information as part of the process of making the decision; and
- effectively communicate their decision.
It is assumed that a person has decision making capacity unless there is evidence to the contrary. If you are unsure whether the principal, an
attorney or alternative attorney has decision making capacity, please seek advice from a medical practitioner.
What does 'legal matters' mean under an Enduring Power of Attorney?
Legal matters, in relation to a principal under an enduring power of attorney appointment, means:
- use of legal services for the principal's benefit; or
- bringing or defending a legal proceeding or hearing in a court, tribunal or other body on behalf of the principal, including settling a claim before or after a legal proceeding or hearing starts.
10 minutes
The master documents are written in plain language and are signed-off by our lawyers at Maddocks.
